Citi targets China cross-border growth through yuan, FX services

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Citi targets China cross-border growth

Highlights

Citi targets cross-border growth by expanding yuan and FX services for Chinese companies, following its approval for a wholly owned securities business in China last month.
Revenue from Chinese clients, especially in electric vehicles, electronics and the energy-transition supply chain, has delivered double-digit growth, becoming one of Citi's fastest-growing areas in Asia.
Citi forecasts a bullish yuan, potentially appreciating to 6.5 per dollar by mid-2025 from 6.67, with recent global volatility causing limited impact on the currency.

China expansion strategy and yuan services

As reported by Reuters, Citi is seeking to build its cross-border business by helping Chinese clients operate abroad, manage currency risk and use the yuan more widely in overseas transactions.

Flavio Figueiredo, Citi's global head of foreign exchange, says the bank's role is to support Chinese companies as they expand internationally. That includes helping them hedge exchange-rate exposure and invoice overseas customers in yuan, an area Citi sees as a growing opportunity as more Chinese businesses look beyond their home market.

The strategy comes after Citi won a licence last month for a wholly owned securities business in China. It also coincides with rising interest from Chinese companies in overseas markets as slower growth at home and intense competition push them to search for new revenue sources.

Citi is also marketing hedging and derivatives products to Chinese companies expanding into Africa, eastern Europe, the Middle East and Latin America. Figueiredo says Chinese financial institutions often find it easier to work with a global bank such as Citi for products tied to currencies including the Brazilian real, Colombian peso and Nigerian naira, rather than establish branches in each market.

Client growth and market implications

Revenue from Chinese clients has become one of Citi's most important growth engines. Marc Luet, Citi's Japan, North Asia and Australia banking head, says the bank has recorded double-digit growth in China-related business for several years, making it one of Citi's fastest-growing areas in Asia.

Luet says Chinese firms are especially active in sectors where the country has built global competitive strengths, including electric vehicles, consumer electronics, digital industries and the broader energy-transition supply chain. He also points to growing interest in Central Asia, where Citi already has an established presence in markets such as Kazakhstan.

For corporate clients, exchange-rate management is becoming more important as overseas earnings face pressure from a gradually strengthening yuan. In Brazil, where benchmark 10-year yields are far higher than in China, Figueiredo says Citi's Chinese clients use options as a lower-cost hedging tool.

Figueiredo says his view on the yuan is reasonably bullish, with the currency potentially reaching 6.5 per dollar by the middle of next year from 6.67 on Wednesday. He adds that recent global market volatility has had limited impact on the yuan, which some market participants see as a more stable and less volatile asset, although broader international adoption of the currency is still likely to be gradual.

Earlier, we discussed China growth outlook amid fresh policy support despite weak demand and property stress.

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